On Friday, July 2, the Small Business Administration (SBA) officially advised lenders involved in the Paycheck Protection Program (PPP) that they would no longer be required to obtain Loan Necessity Questionnaires, SBA Forms 3509 and 3510, from borrowers seeking forgiveness on loans over $2 million.
After significant media attention on large loans in spring 2020, the SBA announced they would automatically review the necessity of any large loan and subsequently released Form 3509 for for-profit borrowers and Form 3510 for nonprofit borrowers starting in November 2020. Despite withering negative comments from the public, primarily due to its narrow focus and subjectivity, the SBA began enforcing the necessity reviews immediately.
In the new announcement to lenders, the SBA said, “Effective immediately, SBA will no longer request the Loan Necessity Questionnaires (SBA Form 3510 and 3511) (sic) for any PPP loan reviews. Loan Necessity Questionnaires that SBA has previously requested are no longer required to be submitted to SBA. If you have an open request for additional information related to the Loan Necessity Questionnaire, please close the request in the (SBA) platform and submit the loan back to SBA. The Loan Necessity Questionnaire module within the platform will also be removed.”
We recommend that any borrower who has not yet filed for forgiveness of a large loan should still prepare a file memo that outlines the business conditions necessitating the loan in the event of possible future audits of the forgivable spend.